Title: GBP/USD renews two-year low under 1.1500, UK leadership contest results eyed
September 5, 2022 12:28 AM ET
As cable traders await the results of the UK Prime Minister's election on Monday, the GBP/USD pair falls to a new low since March 2020. However, as the London opening approaches, cable traders are taking bids at prices near 1.1470.
It's worth noting that the anxiety ahead of the results is adding to fears of a worsening UK energy crisis and the noise surrounding the US-China standoff to put downward pressure on the pair. However, the Labor Day holiday in the U.S. appears to be a challenge for momentum traders.
In addition, Politico published an article stating that Russia's Gazprom said on Saturday that it would increase gas deliveries to Europe via Ukraine, citing media reports.
Still, a likely halt to nuclear negotiations between the U.S. and Iran also amplifies the oil woes for the old continent, as well as the world. "Iran's nuclear talks are stalling again after Tehran's latest response," Bloomberg reports.
Elsewhere, U.S. President Joe Biden's administration poured cold water on expectations that the U.S. could ease or remove Trump-era tariffs on China. "The Biden administration will allow Trump-era tariffs on hundreds of billions of dollars of Chinese imports to remain in place while it reviews the need for them," Bloomberg reported.
On the domestic front, Liz Truss' pre-election pledge to get the U.K. out of the energy bill crisis appears to put her ahead of Rishi Sunak, which could help GBP/USD prices if she becomes the next British Prime Minister. However, her plans for a Bank of England (BOE) overhaul and additional stimulus measures have failed to impress economists like Sunak and thus could keep the pair depressed after an initial rebound.
The outcome of the Tory leadership race will be announced on Monday around 23:00 GMT and will be important for traders of the pair to watch for short-term direction.